ANNUAL REPORT PERMIT YEAR 1 - energymining.sa.gov.au

INNAMINCKA PETROLEUM LIMITED

Innamincka Petroleum Limited (“INP”) of 48

ANNUAL REPORT

PERMIT YEAR 1

14 May 2007 TO 13 May 2008

INNAMINCKA PETROLEUM LIMITED

PRL 14 - PERMIT YEAR 1

2008 ANNUAL REPORT

1.0 INTRODUCTION ...................................................................................................... 1

2.0 PERMIT SUMMARY ................................................................................................. 2 2.1 Permit Year (PY 1) ............................................................................................ 2 2.2 Joint Venture ..................................................................................................... 2

3.0 PERMIT ACTIVITY ................................................................................................... 3 3.1 Drilling ............................................................................................................... 3 3.2 Seismic Data Acquisition/Processing ................................................................ 5 3.3 Construction Activities ....................................................................................... 5

3.3.1 Yanpurra Camp ............................................................................................ 5 3.3.2 Flax 1 Central Processing Facility ................................................................ 5 3.3.3 Well Interventions ........................................................................................ 6 3.3.4 Well Stimulations ......................................................................................... 7 3.3.5 Field Production & Well Testing ................................................................. 10

4.0 COMPLIANCE ISSUES .......................................................................................... 11 4.1 License and Regulatory Compliance ............................................................... 11 4.2 Management Systems Audits .......................................................................... 13

4.2.1 Drilling Activities ......................................................................................... 13 4.2.2 Seismic Activities ....................................................................................... 14 4.2.3 Production and Engineering Activities ........................................................ 14

4.3 Data Submissions ........................................................................................... 15 4.4 Safety .............................................................................................................. 18 4.5 Threat Prevention ............................................................................................ 18 4.6 Future Work Program ...................................................................................... 19

5.0 EXPENDITURE STATEMENT ............................................................................... 20

LIST OF APPENDICES

NO. CONTENTS

1 Flax Retention Licence (PRL – 14 ) – Well Locations

2

INP Compliance Record with activity SEO(s) Table 1: Statement of Environmental Objectives for Drilling and Well

Operations in the Cooper / Eromanga Basin – South Australia (November 2003)

Table 2: Statement of Environmental Objectives (SEO): Petroleum Production at Acrasia Field, Cooper Basin SA - Stuart Petroleum 2003

3 Summary Expenditure Report (to 14 June 2008 – Permit Year 1) (Note: This Report is to be removed from the website posted copy)

Innamincka Petroleum Limited (“INP”)

2008 Permit Year 1 - Annual Report – PRL 14

PRL 14 2008 Permit Year 1 Annual Report_Rev 1.0.docx Page 1 of 20

1.0 INTRODUCTION Petroleum Retention Licence (PRL) 14 was granted on 14 May 2007 having been excised from Petroleum Exploration Licence (PEL) 103 in order to determine the commercial feasibility of the Flax Field. The permit is situated in the central Cooper Basin, adjacent to the SA / Queensland border. This report details the work performed by the Joint Venture during the 1st Permit Year of the licence, in accordance with the requirements of Section 33 of the Petroleum Regulations SA-2000.

PEL 103 Permit Location – 1:250,000 Topographic Sheet ( SG54-15)

PRL-14

PEL 103




2.0 PERMIT SUMMARY

2.1 Permit Year (PY 1) On 01 January 2007 for the purposes of establishing the commercial feasibility of the Flax Field discovery, INP submitted application for a Petroleum Retention Licence (PRL 14) covering the known field area under the terms of Part 5 – Sections 28-33 of the SA Petroleum Act 2000. On 2 May 2007, the Flax Retention Licence (PRL – 14) was offered to the PEL 103 Joint Venture and subsequently accepted on 14 May 2007 with the following work programme for the licence. A detailed map of the Flax Area Petroleum Retention Licence (PRL–14) is presented in Appendix 1and details the wells drilled to date within the permit.

RETENTION LICENCE YEAR WORK PROGRAMME

1

Phase 1 – 1ST Production Pattern Drill 2 Wells (Flax 3 & Flax 4). Fracture Stimulate successful Flax wells (eg. cased & suspended wells). Convert Flax 1 to gas injection well. Production test

2

3 Phase 2

Based upon success of the 1st production pattern and confirmation of field extent, install additional production patterns

as required and prepare Production Licence Application.

4

5

2.2 Joint Venture INP entered into a farmout agreement with Seoul City Gas Co. Ltd (“SCGAU”), with SCGAU purchasing a 25% interest in PEL 103 and any subsequent permits arising from PEL 103. This deal was executed on 20 January 2007 and SCGAU was registered on to the Licence Register on 6 March 2007. The joint venture for PRL 14 at the time of granting and for the subsequent PY 1 is as follows:

1. Innamincka Petroleum Limited (INP) – Operator - 75% 2. Seoul City Gas Co. Ltd (SCGAU) - 25%




3.0 PERMIT ACTIVITY The following section summarises the activities undertaken in the permit over the reporting period (PY 1).

3.1 Drilling The Phase 5 (2007) and Phase 6 (2008) Drilling Programmes were undertaken in the reporting period with a total of 8 wells being drilled, 6 of which were drilled within PRL 14. A brief summary of the well results follows: 1. Flax 3: Drilled as an appraisal/development well 583 m north of the

Flax 1 discovery well and was spudded on 09 July 2007 as the 1st well in the Phase 5 Drilling Programme. The well was designed to appraise the Patchawarra and Tirrawarra reservoir sections. Log interpretation confirms 6.86 m of oil pay in the Patchawarra Fm with a further 6.71 m of potential oil pay (13.57 m total). The Tirrawarra Sst is interpreted to have 11.3 m of net oil pay. The well was cased with 7” (178 mm) casing and suspended as a future oil producer. The rig was released on 27 July 2007.

2. Flax 4: Drilled as an appraisal/development well 610 m north of Flax 2

and 550 m west of the Flax 1 discovery well on the western limb of the SW-NE elongated Flax fault bounded anticline. Flax 4 was spudded on 04 August 2007 as the 2nd well in the Phase 5 Drilling Programme. The well was designed to appraise the Patchawarra and Tirrawarra reservoir sections. Log interpretation confirms 5.5 m of oil pay in the Patchawarra Fm. The Tirrawarra Sst is interpreted to have only 0.61 m of net oil pay at this location due to poorer reservoir quality (low porosity). The well was cased with 7” (178 mm) casing and suspended as a future oil producer. The rig was released on 21 August 2007.

3. Flax East 1 ST 1: Drilled as an exploration on the downthrown eastern side of the

Flax Field some 1.04 km northeast of Flax 1 and 3.15 km northwest of Juniper 2. The well was designed to test for the presence of hydrocarbons in the saddle area between the Flax and Juniper fields thereby confirming that the two fields are connected. The well was spudded on 28 August 2007 as the 3rd and final well in the Phase 5 Drilling Programme. The well objectives were the Patchawarra and Tirrawarra reservoir sections with the Toolachee Fm as a secondary objective. The well was drilled to 2613 m (Toolachee Fm) and the bit pulled for a routine bit change, however the drill string became stuck at




2410 m. Fishing was unsuccessful and on a second attempt, a sidetrack was initiated at a kick of point of 2126 m. The well was from this point successfully drilled to a total depth of 2818. Log interpretation confirmed the successful result of 12.05 m of oil pay in the Patchawarra Fm. The Tirrawarra Sst is interpreted to have 6.25 m of net oil pay giving an accumulated net oil pay total for the well of 18.30 m. The well was cased with 7” (178 mm) casing and suspended as a future oil producer. The rig was released on 29 September 2007.

4. Flax 5: Drilled as the 1st well in the 2008 Phase 6 Drilling Programme

and was located 812 m east-northeast of the Flax 1 discovery well. Flax 5 was spudded on 16 January 2008 and was designed to appraise the Patchawarra and Tirrawarra reservoir sections. Log interpretation confirms 7.00 m of oil pay in the Patchawarra Fm with a further 0.75 m of potential oil pay (7.75 m total). The Tirrawarra Sst is interpreted to have 9.0 m of net oil pay. The well was cased with 7” (178 mm) casing and suspended as a future oil producer. The rig was released on 06 February 2008.

5. Flax 6: Drilled as an appraisal/development well 540 m northwest of

the Flax 1 discovery well and was spudded on 11 February 2008 as the 2nd well in the Phase 6 Drilling Programme. The well was designed to appraise the Patchawarra and Tirrawarra reservoir sections. Preliminary log interpretation confirmed approximately 8 m of oil pay in the combined basal Patchawarra Fm and Tirrawarra Sst reservoir interval with a further 4 m of oil pay in the middle and upper Patchawarra Fm section. The well was cased with 7” (178 mm) casing and suspended as a future oil producer. The rig was released on 28 February 2008.

6. Flax 7 ST 1: Flax 7 was drilled as an appraisal/development well 820 m

north-northwest of Flax 5 and was spudded on 31 March 2008 as the 3rd well in the Phase 6 Drilling Programme. The well was designed to appraise the Patchawarra and Tirrawarra reservoir sections. Having reached a depth of 2215 m the drill string became stuck on a connection and attempts to free the string failed. A sidetrack was successfully initiated from 2171 m and the well drilled on to evaluate the target. Preliminary log interpretation confirmed approximately 10 m of oil pay in the combined basal Patchawarra Fm and Tirrawarra Sst reservoir interval. Significantly, Flax 7 ST 1 resulted in deepening the LKO for the field by 6m from the previous intersection recorded in the Flax East 1 ST 1 saddle well. The well was cased with 7” (178 mm) casing and suspended as a future oil producer. The rig was released on 23 April 2008.




3.2 Seismic Data Acquisition/Processing No seismic acquisition or processing was undertaken during the reporting period.

3.3 Construction Activities

3.3.1 Yanpurra Camp Application was sought and approved for the installation of a new temporary camp at the Yanpurra Lay-down area. The previous camp was removed from within the boundary of the fenced lay-down area and a new camp constructed approximately 175 m to the north east of the fenced laydown area. The new camp provides a 10 man capability and will support the ongoing construction, commissioning and operation activities for INP in the field.

3.3.2 Flax 1 Central Processing Facility Approval to construct the flowlines to Flax 1, 2, 3, and 4 was sought and granted by PIRSA on 9th May. This entailed the removal of surface-laid GRE flowlines and replacing with carbon steel flowlines. This was deemed to be necessary to ensure the HSES and engineering integrity of the Project. Work was ongoing at the end of the reporting period. Flowlines from Flax 2, 3, and 4 will be manifolded together with Flax 1 on the Flax 1 lease. Approval to construct the production facilities was sought and granted by PIRSA on 30th May. The Central Processing Facility will chiefly comprise group and test separators, gas compression and reinjection, storage tanks and tanker load-out facilities. A simple schematic is shown below.




FLAX 1 CENTRAL PROCESSING FACILITY

LEGEND Well

Note Gas 1. Steel Flowlines connect Flax #2, #3 & #4 well heads to inlet manifold at Flax 1 Central Processing Oi2. Flax #1 wellhead is connected to inlet manifold via above ground steel Produced Water / 3. Initially separator gas is flared. Once gas reinjection compressor is installed, it will take suction from separator Water Flax #1 will switch over from producing well to reinjection well, receiving reinjection gas from compressor

Flax

Oil Loadout Pump Evaporation Pond

Test Separato

Inlet

Group Separato

Note

Flax

Flax

Flare

Gas Reinjection Notes 2,

Note

Oil Tanks

Note Note

Produced Oi

OiWater

Tanke

Flax

3.3.3 Well Interventions The following well intervention activities were undertaken during the reporting period: Flax 2 The Tirrawarra and Basal Patchawarra reservoirs were perforated over the intervals 2717 - 2721 and 2723 - 2727 mKB at 4 shots per foot with casing guns and completed with tubing in preparation for fracture stimulation in August 2007. Flax 3 The Basal Patchawarra reservoir was perforated over the intervals 2705.52 - 2709.10 and 2177.61 - 2712.52 mKB. The Tirrawarra reservoir was perforated over the intervals 2714.89 - 2716.64, 2718.6 - 2724.8 and 2729.3 - 2732.41mKB. Both intervals were perforated using 4 ½” tubing conveyed perforating guns run on 2-7/8” CR85 tubing at 5 shots per foot in September 2007 in preparation for a fracture stimulation. A permanent downhole gauge was installed in the well above the packer to monitor the downhole pressure and temperature.




Flax 4 The Tirrawarra reservoir was perforated over the intervals 2716.1 - 2718.6, 2719.1 - 2719.8, 2720.5 - 2723.6, 2724.1 - 2727.1 mKB using 4 ½” tubing conveyed perforating guns at 5 shots per foot run on 2 7/8” CR85 tubing in September 2007. The Basal Patchawarra reservoir was perforated over the intervals 2713.5 - 2715.5, 2716 - 2716.5, 2717.4 - 2720.5mKB using 21/8” link jet guns at six shots per foot in preparation for fracture stimulation.

3.3.4 Well Stimulations Flax 2 Following the successful hydraulic fracture stimulation of the Tirrawarra reservoir in Flax 1 a fracture treatment comprising 39,407 lbs of 20/40 sand and 30/60 proppant was conducted over the Patchawarra reservoir and a fracture treatment comprising 99,177 lbs of 20/40 sand and 30/60 proppant was conducted over the Tirrawarra reservoir. Fluid was a nitrified water base gel system. Minifracs were performed on the both zones prior to the main treatment commenced being pumped 25th September 2007. A treatment history is shown in the graph below:




Flax 3 Following the successful hydraulic fracture stimulation of the Tirrawarra reservoir in Flax 1, Flax 3 was fracture stimulated through the completion string. It had been planned also to fracture stimulate the Middle/Upper Patchawarra formations, however, difficulties were encountered conducting the main Tirrawarra treatment and consequently the second treatment was not carried out. It is planned to return to the zone sometime in the future when operations allow. Pre-frac flowrates were minimal, measured at less than 10b/d. A minifrac was carried out ahead of the main treatment to determine kh, closure, perforation friction and net fracture pressure without N2. The main treatment comprising 111,445 lbs 20/40 sand and 30/60 high strength proppant in a nitrified gel system commenced on the 13th August 2007 and post-frac cleanup commenced on the 18th August. A treatment history is shown in the graph below:




Flax 4 Following the successful hydraulic fracture stimulation of the Tirrawarra reservoir in Flax 1, and Flax 3 and to a lesser extent Flax 2, Flax 4 was completed with 27/8” tubing with the objective of performing fracture stimulation over the Tirrawarra reservoir. The well was perforated underbalanced with 41/2” TCP guns over the Tirrawarra reservoir on the 4th September 2007. Unfortunately a 3 m pup joint was left off the tally of the guns and subsequently the perforations were 3 m lower than intended resulting in the Basal Patchawarra reservoir pay being missed. Additional through-tubing perforations were added in the Basal Patchawarra prior to the fracture stimulation. The final perforated intervals were 2713 - 2715.5m, 2716 - 2716.5m, 2717.4 - 2720.5m, 2713 - 2715.5m, 2716 - 2716.7m, 2717.4 - 2720.5m, and 2721.3 – 2724m RT. Pre-frac flowrates were minimal, measured at less than 10b/d. A minifrac was carried out ahead of the main treatment to determine kh, closure, perforation friction and net fracture pressure without N2. The main treatment comprising 71,777 lbs 20/40 sand and 30/60 high strength proppant in a nitrified gel system commenced on the 21st September 2007 and post-fracture cleanup commenced on the 22 September 2007. A treatment history is shown in the graph below:




3.3.5 Field Production & Well Testing Flax 1 Note, post fracture production commenced 10th July 2005 and was shut-in 30th March 2006 having produced a total of 46,374 barrels of oil and 112.8 mmscf of gas. The well has remained shut-in since this time. Flax 2 Bottomhole samples were taken from the Patchawarra reservoir prior to fracture stimulation in August. Flax 2 was flowed to clean up after the fracture treatment on the Tirrawarra reservoir but ceased to flow when a sand plug packed off in the tubing string. Attempts to bring the well on line failed to dislodge the sand plug and a workover will be necessary to clean the tubing. The Patchawarra reservoir was flowed to clean-up from the 27th September 2007 to the 21st October 2007 recovering approximately 900 barrels of oil and approximately 260 barrels of spent gel. At the time of shut-in the well still had not fully cleaned up. It is anticipated that Flax 2 will be re-entered in October 2008 to commence sand clean-out activities in an attempt to establish stabilized production. Flax 3 Post-fracture flowrates initially averaged around 110 b/d of 57o API oil through a 12/64” choke. A production increase of around 10-fold demonstrated the success of the treatment. The production test continued through to the 19th January 2008 when the well was shut-in. Cumulative production was 8449 barrels of oil. Flax 4 Post-fracture flowrates initially averaged around 125 b/d of 57o API oil through a 12/64” choke. A production increase of around 12-fold demonstrated the success of the treatment. The production test continued through to the 22nd January 2008 when the well was shut-in. Cumulative production was 5416 barrels of oil.




4.0 COMPLIANCE ISSUES

4.1 License and Regulatory Compliance As required, INP maintains a register of non-compliance issues and the following table summarises those matters of non-compliance for Permit Year 1. License Non-Compliance No. Stated Commitment Reason for Non-Compliance Rectification of Non-Compliance

1 • No non-compliance issues to report.

• •

Regulatory Non-Compliance (& Formal Warnings):

• 2000 SA Petroleum Regulations/Act • Approved SEOs under the Act/Regulations • Approved activity EIRs/EARs/ERCs

No. Date Activity Non-Compliance Description Rectification of Non-

Compliance 1 26/10/07 Flowline • Installation of temporary fiberglass

infield flowlines for connection of Flax 2, 3 & 4 to the Flax 1 CPF without full activity notification and approval resulting in a Serious Incident Breach as per Regulation 32. INP received a direction from PIRSA to cease all construction activities until the breach was investigated and fully rectified.

• Undertook review of application for activity procedure to develop compliance documentation;

• Restructured and recruited Engineering Group to undertake and manage the project;

• Reviewed SEO for compliance (Acrasia Field Production SEO);

• Undertook Environmental & Cultural Clearance Surveys;

• Prepared application documentations in accordance with requirements of AS 2885 “Pipelines – Gas & Liquid Petroleum” and the SA Petroleum Act & Regs (2000)

• Prepared Compliance Register;

2 29/01/08 Documentation • Submission of the Flax 3 WCR past due date of 29/01/08

• Report Submitted on 12/03/08

• INP is working with its contractors to provide them with the data in a timely fashion, in order to complete their components of the WCR in the given time frame. Current demands on all contractors is extreme.

3 25/03/08 Documentation • Submission of the Flax 4 WCR past due date of 25/03/08


• As above

4 28/04/08 Documentation • Submission of the Flax East 1 WCR past due date of 28/04/08


• As above




No. Date Activity Non-Compliance Description Rectification of Non-Compliance

5 Various Documentation • Submission of cased hole wireline logs (CBL/SBT) for the Flax 2, 3 and Flax 4 wells

• INP has instigated a regulatory compliance checking system (Tenement Tracker – 05) in order to flag operational and reporting compliance and ensure responsibility for undertaking compliance is internally assigned and checked-off for completion.

6 Various Documentation • Submission of Quarterly Cased Hole Well Reports due since July 06 to Apr 08 to cover the activities from April 06 to Dec 07.


7 Various Documentation • Submission of Down Hole Well Diagrams for the completed wells; Flax 1 and Flax 2.


8 Various Documentation • Submission of Production Data Reports covering the period from Aug 04 to May 08.





4.2 Management Systems Audits

4.2.1 Drilling Activities No full Management System Audits were carried out during the year. Normal System components (eg. checklists, guides etc) were amended and updated as part of the internal constant review and use which is a part of the overall Management System Audit Process. Environmental audits by Tim Fatchen (INP Environmental Consultant) were conducted on a periodic basis throughout the Permit Year and coincided with his field visits. No significant breaches were identified in any activity carried out during the year. To date the only leases which have been restored include the Sprigg South 1, Cummin 1, Pine 1 and Aspen 1 wellsites. The status of the remaining wellsites is as follows:

SEQ. NO.

WELL NAME

RESTORED (yes/no)

Well Status

STATUS (eg Environmental Audit

completed) 1 Flax 1 No C & S Used as Flax field production site for

extended well test- DEH/PIRSA Audit - OK

2 Flax 2 No C & S Initial lease clean-up completed, and will be used as future production site



5 Flax East 1 ST 1 No C & S Initial lease clean-up completed, and will be used as future production site



8 Flax 7 ST 1 No C & S Initial lease clean-up completed, and will be used as future production site

Upon completion of site restoration, audits against the EIR/SEO (GAS Scaling) will be undertaken and results reported to DEH/PIRSA. As stipulated in the initial 2004 Drilling Programme submission, routine audits against the compliance register (2000 Petroleum Regulations and Act and SEO/EIR) were undertaken prior to the commencement of each drilling phase and in the preparation of drilling each well. No major issues were identified as part of these audit and compliance checks. Prior to commencing both the Phase 5 and Phase 6 drilling programmes, a rig audit of Ensign’s Rig 30 was undertaken in order to verify the rig was “fit for purpose”. In both cases the issues identified as being of a significant or critical nature were closed out prior to operations commencing and the results of this audit were communicated to PIRSA.




4.2.2 Seismic Activities No seismic activities were operated by INP during the permit year within PRL 14.

4.2.3 Production and Engineering Activities As at the time of this report, no operational audits had yet taken place, however as part of the developed and approved HSE MS, a fully functional audit and reporting system has been developed for all field Production and Engineering activities. This system is being implemented and the reports from this system will be the basis for all reporting against this requirement in the future.




4.3 Data Submissions The following data was submitted to PIRSA during the permit year:

No. Document / Report Description Date Due

Date Submitted

Compliant(Yes/No)

Well Proposal Documents: 1 Well Application to Drill (Part 1)

- Flax 3 - Flax 4 - Flax East 1 (ST 1) - Flax 5 (Flax 12P) - Flax 6 (Flax 11P) - Flax 7 (ST 1) - Flax 8P - Flax 9P - Flax 10P - Juniper 3P - Juniper 4P

NA

18/09/06 18/09/06 18/09/06 06/12/07 07/01/08 11/03/08 28/02/08 28/02/08 28/02/08 28/02/08 28/02/08

Yes

2 Well Application to Drill (Part 2) - Flax 3 - Flax 4 - Flax East 1 (ST 1) - Flax 5 - Flax 6 - Flax 7 (ST 1)

NA

17/04/07 02/07/07 23/09/07 13/12/07 25/01/08 25/03/08

Yes

Drilling Reports: 1 Daily Reports for Flax 3 inclusive of;

Pre-Spud Report

Daily Drilling Reports Daily Geological Reports

LOPT/FIT Report Blowout Preventer Test Report

95/8” Surface Casing and Cementing Report 7” Production Casing and Cementing Report

Within 24hrs of Activity

09/07/07 10/07/07 – 28/07/07 10/07/07 – 25/07/07

14/07/07 14/07/07 13/07/07 27/07/07

YES

2 Daily Reports for Flax 4 inclusive of;

Pre-Spud Report Daily Drilling Reports

Daily Geological Reports LOPT/FIT Report

Blowout Preventer Test Report 95/8” Surface Casing and Cementing Report

7” Production Casing and Cementing Report


05/08/07 05/08/07 – 21/08/07 05/08/07 – 19/08/07

08/08/07 07/08/07 07/08/07 21/08/07

YES

3 Daily Reports for Flax East 1 (ST 1) inclusive of;






28/08/07 28/08/07 – 30/09/07 30/08/07 – 29/09/07

03/09/07 03/09/07 & 24/09/07

03/09/07 01/10/07

YES


Pre-Spud Report


18/01/08 YES





Date Submitted

Compliant(Yes/No)

Daily Drilling Reports Daily Geological Reports

LOPT/FIT Report Blowout Preventer Test Report


17/01/08 – 05/02/08 17/01/08 – 03/02/08

22/01/08 22/01/08 21/01/08 06/02/08







12/02/08 11/02/08 – 28/02/08 13/02/08 – 26/02/08

15/02/08 15/02/08 13/02/08 27/02/05

YES

6 Daily Reports for Flax 7 (ST 1) inclusive of;



Core Reports (Cores 1 & 2) Blowout Preventer Test Report



01/04/08 31/03/08 – 23/04/08 01/04/08 – 22/04/08

04/04/08 17/04/08 – 18/04/08

04/04/08 03/04/08 24/04/08

YES

Open-Hole Wireline Logs: 1 Flax 3 - Final Wireline Logs 29/09/07 23/08/07 Yes

2 Flax 4 - Final Wireline Logs 21/10/07 24/09/07 Yes

3 Flax East 1 ST 1 - Final Wireline Logs 30/11/07 30/10/07 Yes

4 Flax 5 - Final Wireline Logs - Resent

05/04/08 12/02/08 24/04/08

Yes

5 Flax 6 - Final Wireline Logs - Resent

28/04/08 29/02/08 05/03/08

Yes

6 Flax 7 ST 1 - Final Wireline Logs 23/06/08 14/05/08 Yes

Cased-Hole Wireline Logs: 1 Flax 2 SBT 05/10/07 15/09/08 No

2 Flax 3 SBT 09/10/07 15/09/08 No

3 Flax 4 CBL 31/10/07 15/09/08 Resub: 10/11/08

No

Well Completion Reports: 1 Flax 3 - Well Completion Report 29/01/08 12/03/08 No

2 Flax 4 - Well Completion Report 25/03/08 07/04/08 No

3 Flax East 1 ST 1 - Well Completion Report 28/04/08 14/05/08 No

Quarterly Cased Hole Reports: 1 Quarterly Cased Hole Report - July/Oc t 06 Jul/Oct

2006 07/10/08 No

2 Quarterly Cased Hole Report - Jan/Apr/Jul/Oct 07 Jan/Apr/Jul/Oct 2007

07/10/08 No

3 Quarterly Cased Hole Report – Jan/Apr 08 Jan/Apr 08 07/10/08 No





Date Submitted

Compliant(Yes/No)

Well Down-hole Diagrams: 1 Yarrow North 1 - Cased – Not yet completed NA

2 Flax 1 16/05/05 07/10/08 No

3 Flax 2 07/10/07 07/10/08 No

10 Juniper 1 - Cased – Not yet completed NA

11 Juniper 2 - Cased – Not yet completed NA

Production Data Reports: 1 Flax 1 (EPT data from 2004/05/06/07-May 2008) Monthly

Oct 04 to May 08

03/09/08 No

2 Flax 2 (EPT data from 2007 – May 2008) Monthly Oct 07 to May 08

03/09/08 No

Other Engineering Reports: 1 Temporary Infield Flowline Application (Part 1) NA 30/11/07 Yes

2 Installation & Operation of Temporary Flowlines for Extended Production Test (“EPT”) Application for Approval (Part 1)

NA 25/01/08 Yes

3 Installation & Operation of Flax 1, 2, 3 & 4 Steel Flowlines for Extended Production Test - Final

NA 24/04/08 Yes

4 2008 Flax Field Installation & Operation of Flax Process Facility for Extended Production Test (“EPT”) – PRL 14 Part 1

NA 13/05/08 Yes

5 Flax Field Safety and Operating Plan, Flowline and Extended Production Test Facility

NA 24/6/08 Yes

Seismic Reports: 1 None submitted NA NA NA

Other Reports/Documents: 1 Application for Approval (Part 2) – New Yanpurra

Camp NA 04/04/08 Yes

2 2008 Notice of Intended Entry Report (All 2008/09 Activities)

NA 21/03/08 Yes




4.4 Safety During the permit year, the following safety incidents were recorded and duly reported as per the requirements under the SEO:

No. Date Activity Type* Incident Description

1 Drilling Drilling: • No significant safety Incidents were recorded/reported

during the Phase 5 or Phase 6 Drilling Campaigns.

2 Engineering Engineering: • No significant safety Incidents were recorded/reported

during the Extended Production Testing campaigns.

* LTI-Lost Time Incident MTI-Medical Treatment Incident ADI-Alternative Duties Incident

4.5 Threat Prevention A number of HAZID/HAZOP workshops were conducted as part of the facilities design covering key elements including:

• Installation and use of temporary above ground GRE flowlines; • Gas Injection; • Review and change of flowline material from GRE to carbon steel; • Group separator; • Flare system; • Fuel gas and purge gas systems.

The upcoming well interventions of Flax 5 and Flax East 1 have also recently been reviewed. The Safety and Operating Plan for the Flax Field was in preparation at the end of the permit year and subsequently submitted to PIRSA for approval in June 2008. Innamincka Petroleum Corporate HSES policy was published in June 2008. The policy clearly enunciates the company’s commitments in the areas of:

• Health and Safety Policy; • Environmental, Cultural and Heritage Policy; • Indigenous Relations and Native Title Policy.




INP is currently in the process of developing an HSE Management System that will provide a structured framework for managing health, safety and environment issues within the INP Organization and in doing so helps in reducing exposure to risk events. The HSE Management System currently being developed comprises eight (8) interrelated HSE Standards and from these standards the respective HSE procedures are derived. These HSE Key Standards are:

1. Accountability and Commitment; 2. Risk Management; 3. Safe Operations and Work Execution; 4. Communication and Consultation; 5. Contractor Management; 6. Environment Management; 7. Emergency Management; 8. Audit and Review.

4.6 Future Work Program Proposed activities for Permit Year 2 of PRL 14 include:

• Construct the Central Processing Facility including the compression station on the Flax 1 lease;

• Complete the steel infield flowline installation and tie-in for Flax 1, 2, 3, 4; 5, 6, 7 ST 1, and Flax East 1 St 1;

• Run completions for Flax 5, 6, 7 ST 1, and Flax East 1 ST 1; • Perform fracture stimulations for Flax 5, 6, 7, and Flax East 1 ST 1; • Reenter Flax 2 for sand clean-out and possible repeat of fracture stimulation




5.0 EXPENDITURE STATEMENT A Summary of Expenditure to 14 May 2008 has been included in Appendix 3. This financial statement is “Commercial in Confidence” and is to be removed from the website copy of this report.

APPENDIX 1

FLAX RETENTION LICENCE (PRL – 14 ) MAP AND COORDINATES

ACN 101 313 777

FLAX AREA RETENTION LICENCE – PRL 14

WELL LOCATIONS – TIRRAWARRA TWT STRUCTURE MAP

APPENDIX 2

INP COMPLIANCE RECORD WITH ACTIVITY SEO(s)

For

PERMIT YEAR 1

Note: Activities carried out in PRL 14 during the permit term were undertaken under two different SEO(s) as follows. A statement covering INP’s performance against

each of the SEO objectives is given in the attached tables (Table 1 & Table 2):

Table No. Activity SEO Name

Table 1 Drilling

South Australia Cooper Basin Operators Statement of Environmental Objectives: Drilling and Well Operations

Santos 2003

Table 2 EPT, Production Operations

(including infield flowline construction & operation)

Statement of Environmental Objectives (SEO): Petroleum

Production at Acrasia Field, Cooper Basin SA

Stuart Petroleum 2003

APPENDIX 1 – TABLE 1

INP COMPLIANCE AGAINST SEO(s) OBJECTIVES

DRILLING OPERATIONS

TABLE 1: INP COMPLIANCE FOR DRILLING ACTIVITIES SEO: South Australia Cooper Basin Operators Statement of Environmental Objectives: Drilling and Well Operations

Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement

1. Minimise the risk to public and other third parties.

The criteria for assessing the achievement of this objective have been developed on the basis of the current understanding of the risks associated with drilling and well operations. The key to achieving this objective in relation to both downhole abandonment and surface well site restoration is to ensure that the visual prominence of the abandoned well site and its access track(s) is minimised to the extent where it is difficult for third parties to detect and therefore access these sites. The backfilling of the well cellar and the removal of rubbish from the restored well site should be carried out. Fires or explosions at well sites could result in complications resulting in a spill of production fluids (formation water and hydrocarbon), atmospheric emissions, disturbance of native vegetation and wildlife habitat, loss of reservoir pressure, and risk to employees, contractors and the public. The movement of heavy equipment associated with rig moves present a risk to the safety of employees, contractors and third parties (ie tourists).

• All employees and contractor personnel complete a safety induction prior to commencement of work in the field.

• All employees and contractor personnel undertake a refresher induction every 2 years.

• Signage in place to warn third parties of access restrictions to operational areas, with particular warnings when potentially dangerous operations are being undertaken.

• Permit to work systems in place for staff and contractors in dangerous situations.

• All appropriate PPE (personnel protective equipment) is issued and available as required in accordance with company operating requirements and applicable standards.

• Effective Emergency Response Plan (ERP) and procedures are in place in the event of a fire or explosion.

• Annual exercise of ERP. • Communication of rig moves and other

potential hazards to safety associated with drilling and well operations to potentially affected parties prior to commencement of operations.

• Reporting systems for recording injuries and accidents in place, and annual; (at minimum) review of records to determine injury trends.

• Reasonable measures implemented to ensure no injuries to the public or third parties.

Compliance Statement: INP, to its knowledge, believes it has complied with all obligations required under this SEO objective. INP has implemented the positions of full time field based supervisors to monitor and direct all field operations. As part of this position, all field procedures are being reviewed to ensure ongoing compliance with the terms of this objective. Note: Post the reporting period, an issue of minor non compliance was identified on a recent field visit by Mr Tim Flowers (report 10 June 2008). The non compliance pertained to some rubbish being left in the mud pit at Flax East 1 and remnants of plastic liner being left behind on Crocus 1 drilling lease. Both leases had yet to be restored and cleaned at the time of his inspection, however, in spite of this, processes have been implemented whereby the field staff will conduct routine periodic inspections of ALL wellsites (pre & post restoration) to ensure that the intentions of this SEO objective are complied with fully.

TABLE 1: INP COMPLIANCE FOR DRILLING ACTIVITIES SEO: South Australia Cooper Basin Operat ectives: Drilling and Well Operations ors Statement of Environmental Obj

Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement Implementation of appropriate corrective actions.

• Ensuring safety management plans are updated and reviewed.

2. Minimise disturbance and avoid contamination to soil.

The impacts associated with soil disturbance can potentially include wind and water erosion and dust generation. The main source of disturbance to soils is associated with lease and access track construction, creation of borrows pits, restoration activity, vehicle movement in off-road locations and sub-surface excavations (i.e. sumps, flare pits and borrow pits).

Well Site and Access Track Construction• Consider alternate routes during planning

phase to minimise environmental impacts • Gibber mantle on access tracks and well sites

(excluding sumps) has not been removed, only rolled, during construction and restoration on gibber and tableland land systems.

• Topsoil stockpiled (including gibber mantle) from sump construction and respread on abandonment.

• The need to traverse sensitive land systems and the methods of managing the impacts should be justified in accordance with company procedures, recorded and available for auditing.

Production Testing / Well Blowdowns • If appropriate use:

impermeable flare pit flare tanks.

Fuel and Chemical Storage and Handling • All fuel, oil and chemical storages bunded in

accordance with the appropriate standards • Records of spill events and corrective actions

maintained in accordance with company procedures.

• Spills or leaks are immediately reported and

Well Site and Access Track Construction • 0, +1 or +2 GAS criteria are attained for

Minimise visual impacts of abandoned wellsites and access tracks” objective as listed in Appendix 4 for well lease and access track construction.

• No unauthorised off-road driving or creation of shortcuts.

• No construction activities are carried out on salt lakes, steep tableland land systems or wetlands land systems (as defined in EIR).

Borrow pit construction and restoration • 0, +1 or +2 GAS criteria are attained for

“Minimise Visual Impacts for constructing borrow pits” objective as listed in Appendix 3, and “Minimise visual impacts” and “Minimise impact on soil” objectives as listed in Appendix 5.

Production Testing/Well Blowdowns • No soil contamination as a result of production

testing or well blowdown operations. Fuel and Chemical Storage and Handling • No spills/leaks outside of areas designed to

contain them. • Level of hydrocarbon continually decreasing

for in situ remediation of spills. • Soils remediated to a level as determined by

the SHI process.


Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement clean up actions initiated.

• Logged incidents are reviewed annually to determine areas that may require corrective action in order to reduce spill volumes in subsequent years (and drive continual improvement).

• Chemical and fuel storage procedures, including signage, are reviewed and monitored in audit process.

Spill Response / Contingency Planning • Results of emergency response procedures

carried out in accord with Regulation 31 show that oil spill contingency plan in place in the event of a spill is adequate and any necessary remedial action needed to the plan is undertaken promptly.

• Oil spill contingency plan (reviewed annually) is up to date with specific scenarios relating to spills to creeks and floodplain areas.

• Spill response equipment is audited annually. • Annual spill response training exercise is

undertaken. Waste Disposal (domestic, sewage and sludges) • Covered bins are provided for the collection

and storage of wastes. • All loads of rubbish are covered during

transport to the central waste facility. • Pits are not established in locations, which

pose an unacceptable hazard to stock or wildlife.

• All domestic wastes are disposed of in

accordance with EPA licensing requirements. • 0, +1 or +2 GAS criteria for ‘Waste material’

objective is attained. • No spills or leaks from sewage treatment

process and sludge pits. Compliance Statement: INP, to its knowledge, and through implementing the EIR requirements, believes that it has complied with all obligations required under this SEO objective. See note above regarding Mr Tim Flower’s site inspection report of 10 June 2008. A


Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement minor spill of oil was identified on the Flax East 1 drilling lease. This spill had been internally reported however due to its size had not been reported to PIRSA (<10-20 litres). Field supervisors have been advised that ALL spills (petroleum, fuel & chemical) in an area not designed to contain such an escape must be reported. This system is now in place.

3. Avoid the introduction or spread of pest plants and animals and implement control measures as necessary.

Activity associated with lease and access track construction, such as movement of vehicles and equipment, is a potential source of weed or disease introduction and spread. The most effective technique to prevent the introduction and spreading of weed species is to ensure that vehicles and equipment are appropriately cleaned prior to entry into a construction site.

• Where appropriate a weed and feral animal management strategy is in place (avoidance and control strategies).

• Rig and vehicle wash downs are initiated in accordance with the management strategy.

• No weeds or feral animals are introduced to operational areas.

Compliance Statement: INP, to its knowledge, and through implementing the EIR/EAR/ERC requirements, believes that it has complied with all obligations required under this SEO objective.

4. Minimise disturbance to drainage patterns and avoid contamination of surface waters and shallow ground water resources.

The main threats to drainage patterns and surface waters, and shallow ground waters are considered to be interruption of natural flows as a result of earthworks and contamination. Access track and well site selection should aim to minimise impact to drainage systems, by avoiding sensitive areas and appropriate construction methods to avoid windrows. There is potential for the contamination of chemical and fuel storage areas, from oil and gas systems at well heads, during transportation of fuel and chemicals and

Drilling Mud Sumps and Flare Pits • All drill cuttings, muds and non toxic drill fluids

are contained within the designated mud sumps with adequate freeboard at the completion of operations to allow for a 1m cover of clean fill at remediation.

• Well Heads (Oil and Gas Systems)

Well Lease and Access Track Construction • Well leases and access tracks are located and

constructed to maintain pre-existing water flows (i.e. channel contours are maintained on floodplains and at creek crossings).

Drilling Mud Sumps and Flare Pits • No overflow of drill cuttings, muds and other

drilling fluids from mud sumps. • No waste material disposal to sumps and flare

pits. Well Heads (Oil and Gas Systems) • No leaks/spills outside of areas designed to

contain them.

TABLE 1: INP COMPLIANCE FOR DRILLING ACTIVITIES SEO: South Australia Cooper Basin Operat rs jectives: Drilling and Well Operations o Statement of Environmental Ob

Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement during transportation of wastes. Localised contamination may result from spills or leaks of well operations chemicals (eg. corrosion inhibitors) during storage and handling.

• Where appropriate, imperviously lined well cellars are installed on oil wells.

• Chemical containment devices are installed on gas well skids.

• Well heads shut in and chemicals removed prior to flood events.

• Jet pumps are installed within containment device with an adequately sized containment sump.

Well Blowdown/Production Testing • Activity is conducted in accordance with

accepted industry standards / good oilfield practice.

• If appropriate use: - impermeable flare pit - flare tanks - separators - supervision

Fuel and Chemical Storage and Handling • All fuel, oil and chemical storages bunded in

accordance with the appropriate standards • Records of spill events and corrective actions

maintained in accordance with company procedures.

• Spills or leaks are immediately reported and clean up actions initiated.

• Logged incidents are reviewed annually to determine areas that may require corrective action in order to reduce spill volumes in subsequent years (and drive continual improvement).

• Chemical and fuel storage procedures, including signage, are reviewed and

Well Blowdown/Production Testing • No water (surface or groundwater)

contamination as a result of production testing or well blowdown operations.

Fuel/Chemical Storage and Handling • No leaks/spills outside of areas designed to

contain them.

Compliance Statement: INP, to its knowledge, and through implementing the EIR requirements, believes that it has complied with all obligations required under this SEO objective. All well testing and well abandonment operations are conducted to ensure compliance with this objective. See note above for INP’s Compliance Statement for Objective 2 regarding the minor fuel spills on the Flax East 1 drilling lease.


Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement The major threat of spills is the threat to soil, vegetation and watercourses directly impacted by the spill. Therefore, the achievement of this objective also consequently contributes to the achievement of Objectives 2 and 7 in relation to minimising the impacts on soil and natural habitats. Avoidance of spills will be paramount in areas where the spill can be potentially spread beyond the immediate confines of the spill area into sensitive environments such as creeks and wetlands.

monitored in audit process. Spill Response / Contingency Planning • Results of emergency response procedures

carried out in accord with Regulation 31 show that oil spill contingency plan in place in the event of a spill is adequate and any necessary remedial action needed to the plan is undertaken promptly.

• Oil spill contingency plan (reviewed annually) is up to date with specific scenarios relating to spills to creeks and floodplain areas.

• Spill response equipment is audited annually. • Annual spill response training exercise is

undertaken.

5. Avoid disturbance to sites of cultural and heritage significance.

The aim of the objective is to ensure that any sites of cultural (Aboriginal or non- Aboriginal) heritage significance are identified and protected.

• Consultation with stakeholders (i.e. government agencies, landholders etc) in relation to the possible existence of heritage sites, as necessary.

• Heritage report forms completed for any sites or artefacts identified, and report forms forward to the Department of State Aboriginal Affairs (DOSAA).

• Survey records are kept and are available for auditing.

• Areas requiring remediation which lie outside previously surveyed sites should be surveyed in accordance with company heritage clearance procedures.

Note: Where a negotiated agreement or determination for heritage clearance is in place, compliance with the negotiated agreement or determination takes precedence over the above criteria.

• Proposed well sites and access tracks have been surveyed and any sites of Aboriginal and non- Aboriginal heritage identified.

• Any identified cultural and heritage sites have been avoided.

Compliance Statement: INP, to its knowledge, and through implementing the EIR requirements, believes that it has complied with all obligations required under this SEO objective. All well sites and access tracks were located subject to the clearance given by the NT Clearance Team and all sites of significance were identified and where necessary cordoned off to prevent access. As part of the prespud meetings, all staff were made aware of the regulations and restrictions pertaining to areas of NT significance.

TABLE 1: INP COMPLIANCE FOR DRILLING ACTIVITIES SE South Australia Cooper Basin Operators Statement of Environmental Objectives: Drilling and Well Operations O:

Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Complian e c Statement

6. Minimise loss of aquifer pressures and avoid aquifer contamination. Minimise loss of aquifer pressures and avoid aquifer contamination.

This objective seeks to protect the water quality and water pressure of aquifers that may potentially be useful as water supplies, and to maintain pressure in sands that may host petroleum accumulations elsewhere. To address this objective, the risks of cross flow between aquifer cells known to be permeable and in natural hydraulic isolation from each other, or where there is insufficient information to determine that they are permeable or in hydraulic communication, must be assessed on a case by case basis and procedures implemented to minimize the fresh water aquifer cells from contamination and isolate potential and producing formations from formations that may deplete the reservoir pressure when not on production. The following geological formations are aquifers in the Cooper-Eromanga Basins. They may contain permeable sands which may be in natural hydraulic isolation from each other (from shallowest to deepest), and in general isolation will be maintained between these groups:

i. Eyre; ii. Winton, ii. Mackunda; v. Coorikiana; v. Cadna-owie; vi. Murta (including McKinlay Member) vii. Namur, Adori, ii. Birkhead, Hutton, Poolowanna, x. Cuddapan; Nappamerri Group

Drilling & Completion Activities • A competent cement bond between aquifer

and hydrocarbon reservoirs is demonstrated. For cases where isolation of these formations is not established, a risk assessment incorporating the use of pressure / permeability / salinity data is undertaken in consultation with DLWBC & AAWCMB to determine if lack of cement or poor bond will cause or has caused damaging crossflow which needs to be remediated.

Producing, Injection and, Inactive Wells • Monitoring programs implemented (eg.

Through well logs, pressure measurements, casing integrity measurements and corrosion monitoring programs) to assess condition of casing and cross-flow behind casing.

• Casing annulus pressures are monitored every 2 years.

• The condition of the primary casing barrier is adequate.

• For cases where crossflow is detected, a risk assessment incorporating the use of pressure / permeability / salinity data is undertaken in consultation with DLWBC & AAWCMB to determine if lack of cement or poor bond will cause or has caused damaging crossflow which needs to be remediated.

Well Abandonment Activities • Isolation barriers are set in place to ensure

that crossflow, contamination or pressure reduction will not occur.

• Barriers will be set to meet or exceed the requirements of applicable standards for the decommissioning and abandonment of water bores and abandonment of petroleum wells.

Drilling & Completion Activities • There is no uncontrolled flow to surface (Blow

out). • Sufficient barriers exist in casing annulus to

prevent crossflow between separate aquifers or hydrocarbon reservoirs.

• Relevant government approval obtained for abandonment of any radioactive tool left downhole.

Producing, Injection, Inactive and Abandoned Wells • No cross-flow behind casing between aquifers,

and between aquifers and hydrocarbon reservoirs unless approved by DWLBC.

Compliance Statement: INP, to its knowledge, and through implementing the EIR requirements, believes that it has complied with all obligations required under this SEO objective.

TABLE 1: INP COMPLIANCE FOR DRILLING ACTIVITIES SEO: s bjectives: Drilling and Well Operations South Australia Cooper Basin Operat ro Statement of Environmental O

Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement formations, Walkandi and Peera Peera formations

x. Toolachee; Daralingie; xi. Epsilon, Patchawarra or Mt Toodna or

Purni; • • Tirrawarra sandstone or Stuart

Range; Merrimelia; Boorthanna; Crown Point formations and Basement reservoirs.

Note: Crossflow (if it occurs), should not compromise the long term sustainability of a particular resource.

• The placement of isolation barriers will in general be to isolate the groups of formations as listed under comments. The number and placement of barriers may be varied from this standard approach on a case-by case basis by SACB Operator personnel using relevant available data and the SA Cooper Basin Water Pressure and Salinity Module Report (2002), and in consultation with DWLBC.

7. Minimise disturbance to native vegetation and native fauna.

Primary risks to native fauna include clearing of habitat and obstruction of movement through cleared areas, the presence of borrow pits, fuel and chemical storage and management, and waste management activities.

Well Lease and Access Track Construction and Restoration • Proposed well sites, camp sites, access

tracks and borrow pit sites have been assessed for rare, vulnerable and endangered flora and fauna species before the commencement of construction.

• Consider alternate routes during planning phase to minimise environmental impacts

• Facilities (e.g. borrow pits, well cellars) are designed and constructed as far as practicable to minimise fauna entrapment.

• Sumps and mud pits are fenced as appropriate to minimise wildlife access

• Assessment records are kept and are available for auditing.

• In recognised conservation reserves (i.e. Innamincka Regional Reserve) excavations are left in a state as agreed with the responsible statutory body

• Borrow pits are restored to minimise water holding capacity, where agreements are not in place with stakeholders.

Well Lease and Access Track Construction and Restoration • Any sites with rare, vulnerable and

endangered flora and fauna have been identified and avoided.

• 0, +1 or +2 GAS criteria are attained for “Minimise impacts on vegetation” objective as listed in Appendix 2, during well lease and access track site selection and construction and for “Re-establish natural vegetation on abandoned well sites and access track” objective in Appendix 4.

Borrow Pits Construction and Restoration • 0, +1 or +2 GAS criteria are attained for

“Minimise impacts on vegetation” objective as listed in Appendix 4 during borrow pit site selection and construction, and “Minimise Impact on Vegetation” objective in Appendix 5 for borrow pit restoration.


Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement Waste Management • Covered bins are provided for the collection

and storage of wastes. • All loads of rubbish are covered during

transport to the central waste facility. • Pits are not established in locations, which

pose an unacceptable hazard to stock or wildlife.

Waste Management • Refer to assessment criteria for Objective 11.

Fuel and Chemical Storage and Management • Refer to assessment criteria for Objectives 2

and 4.


8. Minimise air pollution and greenhouse gas emissions.

Atmospheric emissions occur as a result of standard practices undertaken during drilling and well operations. Emissions of particular environmental significance are: • combustion by-products (eg. oxides of

nitrogen, carbon monoxide and sulphur dioxide);

• organic carbon and carbon particulates (black smoke); and

• flared/vented hydrocarbons (gases).

Well Testing • Conduct well testing in accordance with

appropriate industry accepted standards. • Continually review and improve operations. • Appropriate emergency response procedures

are in place for the case of a gas leak. Well Blowdown • Blowdown carried out in accordance with

industry accepted standards / good production practice.

• Any well that is consistently blown down is identified for a small ID tubing or plunger lift installation to minimise blow downs on that well.

• Compliance with EPA requirements.


9. Maintain and enhance partnerships with the Cooper Basin community.

The importance of liaison with and contribution to the local community is recognised by the South Australian Cooper Basin Operators. Notification, consultation, contribution to community activities, projects and events and membership of relevant organisations are considered to be key strategies for ensuring partnerships with the local community are enhanced.

• Relevant affected parties are notified and consulted on proposed activities.

• Forward development plans are presented to the local community.

• Local community projects and events are sponsored and supported where appropriate.

• Industry membership of appropriate regional land management committees and boards i.e. the Lake Eyre Basin Consultative Council,

• No unresolved reasonable complaints from the community.

Compliance Statement: Apart from the breach identified in the construction of the GRE flowline as reported in Objective 5, INP, to its knowledge, and through implementing the EIR requirements, believes that it has complied with all obligations required under this SEO objective. No issues have been


Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement Marree Soil Conservation Board, and Catchment Committees.

raised by any other stakeholder regarding activities undertaken by INP

10. Avoid or minimise disturbance to stakeholders and/or associated infrastructure

Communication and the establishment of good relations with stakeholders and community is fundamental to minimising disturbance to as low as practicably possible. Many pastoral properties are certified under the Organic Beef or CattleCare accreditation schemes and therefore may be affected by fuel and chemical storage, moving machinery and contaminated sites.

• Induction for all employees and contractors covers pastoral, conservation, legislation and infrastructure issues.

• Relevant stakeholders are notified prior to survey and construction of well sites, camp sites and access tracks and undertaking of operations (pursuant to Petroleum Regulations). Borrow pits left open (unrestored) if requested by landholder and upon receipt of letter of transfer of responsibility to landholder.

• Gates or cattle grids are installed to a standard, consistent with pastoral infrastructure in fences where crossings are required for access.

• All gates left in the condition in which they were found (ie. open/closed).

• Potential sources of contamination are fenced as appropriate to prevent stock access.

• System is in place for logging landholder complaints to ensure that issues are addressed as appropriate.

• Requirements of the Cattle Care and Organic Beef accreditation programs are complied with.

• In recognised conservation reserves (i.e. Innamincka Regional Reserve) excavations are left in a state as agreed with the responsible statutory body.

• No reasonable stakeholder complaints left unresolved.

Compliance Statement: INP, to its knowledge, has complied with all obligations required under this SEO objective. INP works closely with fellow stakeholders to ensure good relations are maintained and all issues that may have an affect are communicated and resolved.

11. Optimise waste reduction and recovery.

Waste reduction requires continual improvements in purchasing, efficiency of use and reuse. Due to the distances involved the costs of recycling a large range of products is not possible however

• Bulk chemical and oil purchasing and use of “bulki bins” or other storage tanks in place for large volume items.

• With the exception of drilling fluids, drill cuttings and other fluids disposed during well clean-up, and sewage wastes, all wastes to be disposed of at an EPA licensed facility in accordance with EPA Licence conditions.

TABLE 1: INP COMPLIANCE FOR DRILLING ACTIVITIES SEO: South Australia Cooper Basin Operators Statement of Environmental Obj cti e ves: Drilling and Well Operations

Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement continual review of recycling options is required to ensure that any opportunities are taken advantage of.

• Attainment of GAS criteria for “Site left in clean, tidy and safe condition after final clean-up” objective during well site restoration (refer Appendix 4).

• Attainment of GAS criteria for “Site left in clean, tidy and safe condition” objective during borrow pit restoration (refer Appendix 5).

Compliance Statement: INP, to its knowledge, and through implementing the EIR requirements, believes that it has complied with all obligations required under this SEO objective. The only issue of compliance are the issues raised by Tim Flowers and reported against Objectives 1 and 2 above and pertain to the Flax East 1 and Crocus 1 drilling locations post rig move and prior to the lease restoration works being undertaken.

12. Remediate and rehabilitate operational areas to agreed standards.

Rehabilitation/ abandonment plans for surface activities will be developed in consultation with relevant stakeholders Well Site and Access Track Restoration • Compacted soil areas have been ripped

(except on gibber and tablelands) and soil profile and contours are reinstated following completion of operations.

• No unresolved reasonable stakeholder complaints.

Contaminated Site Remediation • Contaminated sites are remediated in

accordance with criteria developed with the principles of the National Environment Protection Measure for Contaminated sites and in consultation with the EPA.

Well Site and Access Track Restoration • The attainment of 0, +1 or +2 GAS criteria for

(refer Appendix 4): - “minimise visual impact of abandoned

well sites” - “minimise visual impact of abandoned

access tracks” - “re-establish natural vegetation on

abandoned well sites and access tracks”


Environmental objective Comment Guide to How Objective Can Be Achieved Assessment and Compliance Statement Borrow Pit Restoration • The attainment of 0, +1 or +2 GAS criteria for

(refer Appendix 5): - “minimise impact on vegetation” - “minimise impact on soil” - “Minimise visual impacts”

Note: Well abandonment issues addressed under objective 6.

Compliance Statement: INP, to its knowledge, and through implementing the EIR requirements, believes that it has complied with all obligations required under this SEO objective. The only issue of compliance are the issues raised by Tim Flowers and reported against Objectives 1 and 2 above and pertain to the Flax East 1 and Crocus 1 drilling locations post rig move and prior to the lease restoration works being undertaken.

APPENDIX 1 – TABLE 2

INP COMPLIANCE AGAINST SEO(s) OBJECTIVES

EXTENDED PRODUCTION TESTING (EPT) & FLOWLINE CONSTRUCTION & OPERATIONS TABLE 2: INP COMPLIANCE AGAINST EPT/FLOWLINE ACTIVITES SEO: Statement of Environmental Objectives (SEO): Petroleum Production at Acrasia Field, Cooper Basin SA Environmental objective Possible impact Main sources of risk Avoidance, management, mitigation / Assessment and Compliance

Statement

1. Avoid disturbance to sites of Aboriginal and non-indigenous heritage significance

Intrusion or physical site damage to areas of Aboriginal and non-indigenous heritage significance

Access maintenance, local construction, vehicle and people movement, flowline establishment, flowline trenched at single stream crossing.

Use of existing access limits scope for impact. New construction at Flax 1 EPT on areas adjoining or close to existing pad and other infrastructure, already cleared for use by indigenous stakeholders. Flowlines surface laid along access, in areas already heritage cleared. Trenching at single creek crossing for flowlines will follow either the access road or a cut seismic line with no new disturbance. Borrow for road maintenance taken from existing borrow sources, also cleared by indigenous stakeholders

Compliance Statement: In September 2007, INP undertook to construct a GRE infield flowline on the Flax field. The flowline was scouted and installed prior to both regulatory approval and in breach of its obligations to comply with this SEO objective (5). INP was issued with a Notice of Non-Compliance on 26 October 2007. An internal review of the process highlighted significant deficiencies in Active Approval Processes in regard to Production Activities. INP has subsequently implemented the following: • New engineering management; • New internal application approval systems for production &

development activities; • Conducted an NT audit on the existing GRE flowline to ensure

compliance for the selected and installed route; • Reviewed the pipeline process and design; • Dismantled the old GRE line; • Submitted new compliant application for installation of steel infield

flowline system • Conducted NT clearance in accordance with SEO objective.

In regard to all other undertaken activities by INP (drilling and construction), to its knowledge, and through implementing the EIR requirements and NT Cultural Management Plan, believes that it has

TABLE 2: INP COMPLIANCE AGAINST EPT/FLOWLINE ACTIVITES SEO: Statement of Environmental Objectives (SEO): Petroleum Production at Acrasia Field, Cooper Basin SA Environmental objective Possible impact Main sources of risk Avoidance, management, mitigation / Assessment and Compliance

Statement complied with all obligations required under this SEO objective.

2. Minimise disturbance to vegetation and habitat

Physical damage to soils, vegetation and habitat; fires; oil spillage

Access maintenance; local construction, vehicle and people movement, flowline establishment, flowline trenched at single stream crossing; natural limits on rehabilitation; fires at well or in transit; spillages and spread of spilled oil

Use of existing access; maintenance of access to minimise dusting, gullying or subsidence under additional traffic.; prohibition of off-easement vehicle movement. Borrow for maintenance taken from existing pits with low erosion hazard. Procedures in place to limit and rehabilitate spill damage (see "Avoid spills" below)


3. Minimise soil impacts 4. Minimise disturbance to

gibber surfaces

Accelerated soil erosion and bulldust development. Potential start-up of long term irreversible erosion on gibber slopes >2% Road formation creating water interception problems.

Flowline trenches Access deterioration Drainage associated with road formation

Flowlines constructed and laid above ground other than single creek crossing; trenching at crossing covered by compacted gravel and stone at grade to stream Flowline routes on slopes >2% rolled (as for seismic line preparation) to ensure that laying and pickup vehicles can do so without creating potentially eroding wheel ruts Maintenance of haul road. Formation maintained by laying clay directly over gibber mantle without cutting the mantle, to avoid drain-initiated gullying, other than in approach to Patchawarra Ck, where some benching is unavoidable for safety reasons. Obvious drainage crossed at grade. At grade crossings, shallow spoon drains provided to minimise redirection of overland flow by formation. Borrow taken from level or near-level areas.


5. Avoid disturbance to rare, endangered, vulnerable species

Oil contamination Flowline breaks; oil loading spills; transport spills;

Existing access only used. No such species known to be present along access within lease area; if present, then associated with common habitat and can be expected to be widespread in district. Flowlines: see Spills, below


TABLE 2: INP COMPLIANCE AGAINST EPT/FLOWLINE ACTIVITES SEO: Statement of Environmental Objectives (SEO): Petroleum Production at Acrasia Field, Cooper Basin SA En ironmental objective v Possible impact Main sources of risk Avoidance, management, mitigation / Assessment and Compliance

Statement

6. Avoid impacts on high biological value or wilderness value areas

Oil contamination in high biological or wilderness value areas; fires originating from oil spillages extending into high value areas; proliferation of tracks and vehicle movement in areas of high wilderness value

Flowline breaks; oil loading spills; transport spills; secondary fires from transportation fires; unnecessary road construction; off road movement; increased public access

Facility design to prevent spills; minimal formation water disposed away from creeklines; bunding and traps provided to prevent spills entering creek line; procedures in place to minimise transportation spill risks in wet conditions; procedures to limit the spread of fires associated with spills; limitation of movement to prepared access; utilisation of pre-existing borrow sources where needed; utilisation of local borrow to minimise visual impact from permanent colour contrasts; prohibition of public access. Flowlines: see Spills, below



Statement

7. Avoid flowline, process, storage and loading facility spills

8. In the event of a process fluid spill, minimise impacts on biota, soils, surface water and groundwater (including rapid cleanup)

Pollution through flowline ruptures local oil spills, tank or filling point overflows

Corrosion issues, flowline delivery systems, EPT facility, oil storage, pumping, loading facilities

Production delivery flowlines: Steel flowlines used between Flax wells and EPT: corrosion issues handled by wall thickness, or use of corrosion inhibitors. Flowline product containment integrity will comply with AS2885 (Pipelines, gas and liquid petroleum). Flowlines pressure tested to withstand the highest forecast production operating pressures and production conditions; protection from overpressure from thermal or production effects provided in Installation and operation; automatic shut-ins at wellheads for overpressure (choke failure) and underpressure (flowline rupture); routine visual, corrosion and pressure test checks. Flowlines routed and guarded to prevent mechanical interference and damage. Lines laid alongside access tracks offset some 10m to a maximum 30m. As well as regular formal inspection, location provides for continuous ad hoc inspection by staff Lines laid and restrained on hardwood, polythene or other sleepers but not CCA-treated timber, to keep steel pipe out of contact with corrosive local soils other than at buried points (creek crossings, road crossings) Restraints attached to lines Lines led under roads via steel or concrete culverts: Lines crossing creek lines between Flax 1 and Flax 2, west of Flax East 1 and south of Flax 7 trenched to avoid flash flood damage and provided with cathodic and/or other external corrosion protection. Lines signposted in accordance with AS2885, with additional access-edge marking provided. Low speed limits and workforce/contractor induction will be enforced in Flax Field Testing undertaken during an unstocked period, by arrangement with Innamincka Station. Area of operations is securely stock-proof fenced. Appropriate flowline(s) flushed of hydrocarbon when well(s) suspended At wellsites and EPT: High containment integrity systems using steel piping and complying with ANSI B31.3 Chemical and Petroleum Refinery Piping. Piping pressure tested to the highest forecast production operating pressures and production conditions. Automatic shut-ins at wellheads for overpressure (choke failure) and underpressure (flowline rupture)


Statement Wellsite delivery piping to flowline (or direct to EPT manifold at Flax 1 well) to be thickwall carbon steel to provide a margin for corrosion resistance without the need for corrosion inhibitor chemical use of handling. Tanks bunded with bunds sufficiently large to provide for catastrophic tank failure. Delivery pump and manifold(s) separately bunded to cope with local failure Tanks provided with venting systems with vent lines led away to safe areas. Overpressure Emergency Shut Down systems in operation. Tanks maintained to below 2/3rds specified working pressure Tank fill levels to be determined following evaluation of oil: initially fill level to be no more than 80% capacity because of high flash off with high volatility oil. Overfilling Emergency Shut Down systems in operation. Delivery hard-piped to pump and loading point. Loading area to be compacted clay pad, bunded including entry and exit. Flexible hose with cutoffs for train loading; any minor spillages at loading point to be left to evaporate and bio-remediate. Excessive contamination of surface landfarmed on other portions of pad or disposed into drilling sump. Major spills will be held by compacted clay surface and bund, salvaged by pumping. Procedures in place for minimising overflow and loading spill risks, and integrity management. Attendance at equipment at all times during road tanker filling. Active management of storage tank filling. Filling systems, storage tank operation and tanker procedures in accordance with AS1940 The Storage and Handling of Flammable and Combustible Liquids Defined chemical storage areas with protection against run-on/runoff or wind transport.



Statement

9. Minimise fire risk at facility; prevent the spread of any fires to wellhead

Loss of resource (also OH&S considerations not covered in this EAR)

Spillage, overflow, ignition sources

Earthing provisions as determined in EPT under AS1940 and AS3000 and any other relevant Australian standard. Further risk evaluation as part of detail EPT design and implementation of additional fire prevention systems where required. Minimisation of ignition potential through earthing loading facilities and tanker in accordance with AS3000. Vent lines fitted with flame arrestors. Flare and tank venting points set away from tanks, loading, office, with dispersion away from EPT pad level. Containment and isolation of fires. Maintenance of separation distances of well, tanks, vents, flares, separator, pumps and tankers to avoid escalating events and to allow manual shutoff/isolation of fuel. Bunding (for pool containment) as above. First attack extinguishers present for fires at loading pump or at tanker. Tank fires, or fires where first attack failed, allowed to burn out (approval will be sought under AS1940) Failsafes/ignition maintenance associated with flare at EPT Windsock provided at EPT


10. Avoid transportation spills 11. In the event of a

transportation spill, minimise the likelihood of its spread, minimise impacts of fire resulting, cleanup of oil-affected land.

Pollution through transportation oil spills; spread of spills; secondary fires from transportation fire

Road crashes, movement in unsafe (eg wet) situations, spillage in periods or locations where oil can be easily spread, particularly wet areas.

Procedures to limit risks of major spill, or to remediate, to include: --No movement on wet roads or in wet conditions --No "wet wheel" fording of flowing water other than on permanent causeway at Innamincka when open --No night moves of full trains when wet conditions impending --Speed limitations on vehicle movement on the Flax Field Access road (50 km/hr) --Signage and specific speed limitation notices at Patchawarra Creek crossings (all branches). In the event of a spill in transit within the lease area, contaminated soil on sandplain (Cordillo Road area) will be either landfarmed in place for bio-remediation, or in extreme cases removed for pit disposal. Contaminated soil from spillage at a watercourse crossing will be removed. Spills on gibber: surplus oil salvaged and remainder left, fenced if necessary, to bioremediate


Statement naturally. Purchaser/transportation company will be required to have spill contingency and emergency response plans in place, and conform to Dangerous Substances Act 1979 and Environment Protection Act 1993 Actual transportation fires permitted to burn out. Earthmoving equipment may be brought to a transportation fire to contain and extinguish secondary fires resulting.


12. Formation water cleaned to no visible oil before disposal

13. Minimise adverse impact on livestock

14. Avoid contamination of stockwaters with hydrocarbons and biocides

15. Avoid contamination of natural surface waters with hydrocarbons and biocides

16. Avoid contamination of groundwater with hydrocarbons and biocides

Pollution of surface waters by formation water Interference with stock Pollution of stock water Pollution of groundwater

Formation water disposal with hydrocarbons present polluting surface water

Minimal formation water production expected. Formation water separated in separators and/or gauge tank and disposed to evaporation in flare or via interceptor to former tank farm clay-sealed and bunded pad as evaporative area. No water leaves the prepared area or is disposed to surrounding environment. Secondary minor disposal by forced evaporation/combustion in flare. Evaporative disposal area and flare out of any conceivable flooding area Daily inspection of water output for visible hydrocarbons. If more than surface film appears, longer residence separation in stock tanks is available while operations of gas/fluid separator and gauge tank are adjusted EPT formal liaison with pastoral operators: EPT facility to be stockproof-fenced as well as flare, vent and evaporation areas. No groundwater impacts likely: wells production cased; no jet pumping of similar


17. Minimise visual impacts Visual impacts through obtrusive access and development and/or visible long-term persistence of facility and access.

Access and facility construction and maintenance.

Facility is largely out of sight and most access is masked from the Innamincka-Cordillo Downs road. Flare at EPT may be visible at night



Statement

18. Minimise public and third party risks

19. Minimise workforce hazards

Creation of new public and workforce risks: road train collisions, spills, fire

Oil transport; fire hazard at loading point; unauthorised persons entering field/facility

Regular liaison with Regional Reserve Management at Innamincka Regular liaison with Innamincka Station pastoral management Signage on haul road prohibiting entry, warning against trespassing, and warning of danger associated with petroleum activity and truck movements. Limitations on road train movements as above. Key-operated gate on entry to Flax Field for duration of test Signage associated with flowlines. Flowlines offset to access. Flowline crossings culverted. Protection of wellheads by overpressure/underpressure cutoff valves. Firefighting provisions (extinguishers) for loading area and pump bunded area. Separation of wellhead, pump, tanks and loading sufficient for isolating major fires. Fully earthed storage and loading facilities. Emergency Shut Down systems in place for overpressure and overfill in tanks. Windsock erected to show direction of venting gases at EPT Safety signage at individual wellheads to include “venting to atmosphere” notices. Procedures for approaching and moving in field to be developed as part of production management . Proposed operation subject to HAZID and HAZOP as part of design and development of Production Operating Manual and procedures.


20. Develop and test alterations to Production Operation Manual

Loss of impact protection/mitigation measures currently designed for.

Alterations to operation which increase any of the preceding risks or create new risks not foreseen in the present operating manual

Proposed change subject to HAZID and HAZOP procedures, environmental re-assessment as part of design and development of alterations.


21. Develop long term closure and remediation plan in advance of any closure

Derelict site remaining in the event of closure and abandonment

Unplanned or uncosted licence surrender or physical withdrawal

Site is expected to test positive for full production. Site modification/remediation planned as part of full production operations. In the case of not proceeding, planning of closure and remediation SEO to be developed prior to first producing well abandonment.

Compliance Statement: INP, to its knowledge, and through implementing the EIR requirements, believes that it has complied with all obligations


Statement required under this SEO objective.

APPENDIX 3

Expenditure Report to 14 May 2008

PERMIT YEAR 1

SUMMARY EXPENDITURE REPORT Report Date to 14 May 2008

(Note: This represents the costs paid during the period 14 May 2007 to 14 May 2008)

COMMERCIAL IN CONFIDENCE

The Expense Statement has been removed from the report and is provided as a separate document

ANNUAL REPORT PERMIT YEAR 1 - energymining.sa.gov.au

Documents

Transcript of ANNUAL REPORT PERMIT YEAR 1 - energymining.sa.gov.au